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CNNfn tech stock report
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November 11, 1998: 4:35 p.m. ET
Intel 4Q outlook fuels rally in chip sector; Internet stocks cool off
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NEW YORK (CNNfn) - The chip sector staged a strong rally midday Wednesday, fueled by a positive industry outlook from Intel Corp., while shares of the high-flying Internet market fell back to earth.
After Tuesday's market close, Intel said strong demand for PC products would drive higher fourth-quarter revenue past expectations. The chip giant also said it expects to garner $2.5 billion in revenue from online sales in the quarter, exceeding the company's goal of $1 billion.
Intel (INTC) shares climbed to a new 52-week high, rising 6-1/8 to close at 103-11/16 in midday trading, according to preliminary figures.
Intel's news drove the rest of the sector higher as well, as investors took the company's report as a harbinger of good things to come for the struggling industry.
"I think what Intel's saying essentially is the PC business is a little bit better than we were all thinking, and that makes Intel a beneficiary, of course, and some other stocks as well," Chris Galvin, technology analyst at Hambrecht & Quist, told CNNfn.
Texas Instruments Inc. (TXN) rose 5-3/8 to 69-1/4; Micron Technology Inc. (MU) jumped 3-11/16 to 47-15/16; and Applied Materials Inc. (AMAT) climbed 1-15/16 to 37-9/16.
The chip sector's good fortune trickled over to computer shares. IBM Corp. (IBM) gained 1-1/16 to 157-1/16.
Compaq Computer Corp. (CPQ) rose 1-5/8 to 34-1/2 after the company announced it will take on Dell Computer Corp. and Gateway Inc. in the built-to-order, direct-ales model.
"Compaq is No. 1 in the retail segment, they're No. 1 in the high end of the business," said Andrew Neff, an analyst at Bear Stearns. "In the small-business segment, they don't have the same market share they have elsewhere. The key for Compaq is how well they'll execute."
Dell (DELL) jumped 1-5/8 to 71-15/16; Gateway (GTW), however, shed 1-7/16 to finish at 57-3/16.
While chip shares soared, the pendulum swung the other way in the volatile Internet sector, as companies handed back much of the gains it reaped in the last few days.
Online auctioneer eBay Inc. (EBAY) plunged 14-15/16 to close at 115-15/16 after Donaldson, Lufkin & Jenrette downgraded the stock to "market perform" from "buy" because of its high valuation. eBay shares had skyrocketed 56 percent over the two previous days.
Internet service providers also took a hit during Wednesday's Internet sell-off. America Online Inc. (AOL) dropped 7-1/8 to 137-3/8; MindSpring Enterprises Inc. (MSPG) fell 5-5/8 to 51-3/4; and Earthlink Network Inc. (ELNK) slipped 2-5/16 to 47-3/4.
Among Web portals, Yahoo Inc. (YHOO) plunged 11-9/16 to 165, while Lycos Inc. (LCOS) tumbled 5-9/16 to 48-13/16.
VocalTec Communications Ltd. (VOCLF), however, rose 3-3/8 to 13-3/8 after the company announced it is working with Cisco Systems Inc. (CSCO) to develop interoperability between their Internet Protocol telephony solutions. VocalTec software enables audio, video, data and text between personal computers and other devices over IP networks.
In the software sector, Oracle Corp. (ORCL) shares climbed 2 to 33-1/2. The software giant announced a deal to acquire configuration software maker Concentra Corp. for $43 million. Concentra (CTRA) shares nearly doubled, rising 3-5/16 to 6-7/8.
Finally, EarthWeb Technologies (EWBX) launched a successful initial public offering, up 34-11/16, or 248 percent, from its start price of 14, to close at 48-11/16. 
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